www.pwc.com Who s driving the oil price? 7 August 2017
Important notice The following market benchmarking exercise has been performed as at 30 June 2017. Given the rapidly evolving views of market participants, certain views can become quickly outdated. As part of our analysis, it should be noted that we are not providing an independent view on the oil & gas price forecasts. Instead, we are collating market participant views. Our market benchmarking data and conclusions should not be applied mechanistically. Instead, careful consideration should be given to the purpose of the valuation and to the price forecasts and sensitivity analysis used. PwC 2
Brent Oil Price & deal market 1 PwC 3
$/bbl Market brent oil price forecasts There has been a slight decrease in market expectations in the short term with longer term forecasts largely the same as six months ago Our benchmarking indicates that the average brent oil price is currently expected to increase from $55/bbl in 2017 to $82/bbl in 2026. This view is similar to the position six months ago when the price was expected to increase from $56/bbl in 2017 to $79/bbl in 2026. In the short term, the average brent oil market view has been revised downwards by $4.7/bbl in 2018 and 2019, and by around $2.6/bbl in 2020 and 2021 (as shown in the graph below). In 2025, this position reverses with the average market brent oil forecast being revised upwards by $2.6/bbl with the longer term view not too dissimilar to the view 6 months ago. Brent oil price forecast comparison 90 80 70 60 50 40 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Broker average June 2017 Broker average December 2016 Source: Broker reports Brent Price Forecast - Nominal 100 90 80 70 60 50 40 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 50% interquartile range Consensus Economics Consultants Median Eikon forward curve (30/06/17) Source: Broker reports, Eikon Broker Median Protecting against uncertainty To protect against uncertainty, some companies are building in contingent price mechanisms into their deals to benefit from upside and minimise risk on the downside in the event that the oil price moves. We found that 39% of global upstream deals (deal value > $250m) involved contingent consideration in Q2 of 2017, whereas in Q2 of 2016 this figure was 11% and just 1% in Q2 of 2015. Of the transactions between June 2014 and January 2017, 15 out of 29 transactions had contingent consideration mechanisms that protected against the future oil price. For further details, please refer to the PwC thought-piece, Oil & Gas deals,, Trends in contingent consideration mechanisms within E&P transactions, May 2017. PwC 4
Influence of OPEC There has been an inability to sustain the post OPEC November 2016 brent oil price increase, even with the extension of the production cuts Price performance After the November 2016 OPEC meeting in Vienna, Brent rose significantly, buoyed by hopes of lower production and higher prices. But the effect was short-lived. Iraq has not complied with the agreed cuts, and Kazakhstan has actually boosted its output from the Kashagan field. Likewise Libya has announced plans to ramp up production to 1.0 million bbls/d during 2017, and production levels in Iran and Nigeria are also rising. After the initial positive increase in the average brent oil price by 17% in December 2016, it seems OPEC and its allies have not been able to maintain the average brent oil price at this level with a downward trajectory having been witnessed since the start of the 2017 year. Brent is now hovering just over $50/bbl even after extension of the production cuts that had been agreed in the two most recent OPEC meetings. It remains to be seen what impact the tough talking at the July meeting will have. The big questions now are about OPEC s power and resolve: can it enforce cuts in production and sustain the brent oil price, and if it can t what does that imply for the future? Monthly average brent oil price $/bbl Sept 16 Oct 16 Nov 16 Dec 16 Jan 17 Source: Capital IQ, highlighted columns depict OPEC meet Feb 17 Mar 17 Apr 17 May 17 46.92 47.54 47.35 55.34 55.78 56.27 52.62 54.05 51.54 47.76 Our view on the oil prices is there's still a lot of uncertainty in the marketplace, so while we have seen the prices go up in the short term, we're not building our investment campaign based on the assumption that those prices are going to be there forever ExxonMobil CEO- March 2017 I think the oil price will stay in low $50 s for 2017 OMV A.G. CEO- May 2017 Jun 17 PwC 5
KSA Oman Libya UAE Algeria Qatar Iraq Iran Kuwait OPEC fiscal deficit Given the challenges of balancing fiscal deficits at current prices, are the IPOs of Adnoc Distribution and Saudi Armco a sign of things to come? OPEC Fiscal Break Even Prices e2017 US$/bbl KSA is looking to issue $27 90 billion in bonds. Proposed IPO for Saudi Aramco 80 70 60 50 40 30 All OPEC member states are struggling to reach their fiscal break-even price US$50/bbl. OPEC fiscal deficit: Non OPEC Crude OPEC Crude Now that the oil price is just above the psychological $50/bbl mark, the majority of OPEC member countries will be facing challenges balancing their fiscal deficits. The much Non anticipated OPEC OPEC IPOs of OPEC Adnoc Distribution and Saudi Crude Crude NGL Aramco highlights the impact that the decline in the oil price has had, as countries look to reform their economies. Is this is a sign of things to come? The question, of course, is how governments will react to this, the potential for stranded assets and how long this level of pricing is likely to last. As show in our benchmarking analysis, we observe that the average brent oil price is expected to be $82/bbl in 2026. 20 10 0 Source: OPEC, EIA, IMF, Strategy& research Next edition? In our next edition, we will look at some of the themes of a low oil price on national budgets and debt levels of oil & gas producing nations. PwC 6
The disruption of electric cars on oil prices Electric vehicles have been growing in popularity for some time, but now that the UK has announced plans to ban the sale of new diesel and petrol cars by 2040, it s a good time to look at the impact this could have on the oil price Background Given that roughly half of the world s oil is used for road transport, new electric technologies could have a huge impact on the industry. The number of global car manufacturers which have already announced plans to go green could suggest we have reached a tipping point and that this could be a disruptor to the future oil price. Volkswagen have announced that they will only manufacture hybrid vehicles by 2020, all new Volvo models will have electric motors from 2019, and by 2019 BMW will build a fully electric Mini. As the table on the right indicates, some market commentators expect that the electric vehicles penetration of the global car fleet is expected to be significant by c.2035-2040. The range of views however, indicates the uncertainty surrounding the uptake of electric vehicles. Where does that leave oil? Oil demand from the road transport sector is not just about electric cars, it s also a function of the number of cars on the roads. Studies suggest that the total number of cars across the world is set to increase - perhaps by up to 80% by 2035, driven (in both senses) by the newly prosperous classes in emerging markets, and by better road infrastructure. At the same time, industrial and commercial vehicles account for a larger proportion of oil demand than passenger cars, and the use and cost of batteries in the former is unlikely to increase significantly for the foreseeable future. Even if electric cars become more widely available, their widespread use will demand significant change in consumer attitudes and also investment in infrastructure such as charging points, and achieving longer battery life. The manufacturers also need to adapt their business models to make these vehicles more profitable and commercially viable. What are the consequences? Taking all these factors together, EVs could displace oil demand by around 2mn bbls/d by about 2030, and possibly by as much as 25mn bbls/d by 2050. To put this in perspective, there was a 2mn bbls/d increase in supply in 2014-2015 which caused the price decline Dieter Helm has controversially taken a contrary view to our brent oil benchmarking and expects the brent oil price to decline largely due to advancements in low carbon technologies including EVs. In short, we do not expect oil demand to be much affected by electric vehicles in the short to medium term. Longer term is harder to predict, but we suspect that some of the long-term price forecasts that we are seeing are not yet currently forecasting a significant disruptive impact of EVs in the long term brent oil price. Source EV penetration Year OPEC 22% 2040 IMF case 1 93% 2042 IMF case 2 36% 2042 Carbon Tracker and Grantham Institute 35% 2035 BP 6% 2035 Barclays 26% 2030 Sources: BP Energy Outlook, Barclays Energy & Autos, IMF Riding the Energy Transition, Rethinkx Rethinking Transportation 2020-2030, Carbon Tracker Expect the Unexpected Short of a nasty war which itself would bring a price spike but not a recovery I can t see any reason for oil prices to go up, Dieter Helm PwC 7
Brent Oil benchmarking 2 PwC 8
$/bbl Broker and consultant Brent oil price forecasts (30 June 2017) Broker and consultant Brent oil price forecasts Brent Price Forecast - Nominal 100 We have collated 27 recent Brent crude oil price forecasts of a group of brokers and consultants. The graph on the right illustrates the low, median, high and inter-quartile views against the Thomson Reuters Eikon Brent Oil (ICE) forward curve as at 30 June 2017. The values shown are in nominal terms. Market participant forecasts are generally higher than the liquid period of the futures curve. We also observed that broker reports tended to be lower on average than the consultants views by c. $5/bbl. in the long term. Broker views as of 30 June 2017 tended to be c. $2/bbl. lower than broker views as at 31 December 2016. 90 80 70 60 50 40 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 50% interquartile range Consensus Economics Consultants Median Eikon forward curve (30/06/17) Broker Median Source: Various broker reports, Capital IQ PwC 9
Broker and consultant Brent oil price forecasts (30 June 2017) Broker /Source Date Original broker unit 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Deutsche Bank 22/06/2017 US$/bbl 54 54 56 58 60 61 n/a n/a n/a n/a Macquarie 22/06/2017 US$/bbl 54 49 53 65 66 68 69 71 72 74 UBS Research 06/07/2017 US$/bbl 56 60 65 70 70 72 74 75 77 78 Wells Fargo Securities LLC 30/06/2017 US$/bbl 53 58 62 61 n/a n/a n/a n/a n/a n/a Barclays 06/07/2017 US$/bbl 52 57 63 64 65 n/a n/a n/a n/a n/a Credit Suisse 28/06/2017 US$/bbl 58 66 68 69 n/a n/a n/a n/a n/a n/a RBC 16/06/2017 US$/bbl 57 63 67 71 75 79 81 82 84 86 HSBC 03/07/2017 US$/bbl 56 65 70 71 73 74 76 78 79 81 Evercore 16/06/2017 US$/bbl 60 65 n/a n/a n/a n/a n/a n/a n/a n/a BMO 26/06/2017 US$/bbl 51 53 53 58 63 n/a n/a n/a n/a n/a JP Morgan 07/07/2017 US$/bbl 55 55 60 66 78 78 79 81 83 84 ING 21/06/2017 US$/bbl 49 46 50 n/a n/a n/a n/a n/a n/a n/a Societe Generale 19/06/2017 US$/bbl 57 59 65 70 75 n/a n/a n/a n/a n/a Jefferies 29/06/2017 US$/bbl 56 64 67 70 n/a n/a n/a n/a n/a n/a ABN AMRO - Consensus Economics 19/06/2017 US$/bbl 58 63 68 n/a n/a n/a n/a n/a n/a n/a GKI research - Consensus Economics 19/06/2017 US$/bbl 56 61 65 67 70 70 71 73 74 76 Moody's Analytics - Consensus Economics 19/06/2017 US$/bbl 55 59 64 67 70 74 77 80 84 87 BNP Paribas - Consensus Economics 19/06/2017 US$/bbl 62 63 60 63 n/a n/a n/a n/a n/a n/a Citi Group - Consensus Economics 19/06/2017 US$/bbl 63 60 52 n/a n/a n/a n/a n/a n/a n/a Commonwealth Bank - Consensus Economics 19/06/2017 US$/bbl 55 52 48 53 55 63 65 66 68 69 Morgan Stanley - Consensus Economics 19/06/2017 US$/bbl 52 52 51 52 54 n/a n/a n/a n/a n/a GLJ (Consultants) 01/07/2017 US$/bbl 52 55 60 65 69 72 75 78 81 85 Oxford Economics (Consultants) 13/07/2017 US$/bbl 52 52 59 68 75 79 82 85 88 91 EIU (Consultants) 01/07/2017 US$/bbl 54 52 54 58 60 n/a n/a n/a n/a n/a IHS (Consultants) 14/06/2017 US$/bbl 55 54 62 n/a n/a n/a n/a n/a n/a n/a McDaniel (Consultants) 01/07/2017 US$/bbl 52 57 61 65 72 76 80 82 83 85 Sproule (Consultants) 31/05/2017 US$/bbl 55 57 67 72 75 77 78 80 81 83 Overall - High US$/bbl 63 66 70 72 78 79 82 85 88 91 Overall - Low US$/bbl 49 46 48 52 54 61 65 66 68 69 Overall - Average US$/bbl 55 57 60 65 68 72 76 78 80 82 Overall - Median US$/bbl 55 57 61 66 70 74 76 79 81 84 Broker - Median US$/bbl 56 59 62 66 70 72 75 76 78 80 Consultants - Median US$/bbl 53 54 60 65 72 76 79 81 82 85 Consensus Economics 19/06/2017 US$/bbl 55 57 59 62 63 68 69 71 72 74 Eikon Forward curve 30/06/2017 US$/bbl 49 51 52 n/a n/a n/a n/a n/a n/a n/a Benchmarked Overall Median (December 2016) US$/bbl 57 65 68 71 73 77 79 80 82 84 Source: Consensus economics, various broker reports, Capital IQ PwC 10
Brent Oil Energy Lender Price Survey Energy reserve-based lenders forecasts Current Brent Oil Pricing Base Case ($/bbl) Macquarie Capital s quarterly Energy Lender Price Survey is a commodity pricing poll of energy reserve-based lenders. The most recent survey shows little to no change of the mean prices as compared to the previous survey and a slight narrowing of the range of forecasts. We note that the mean price is towards the lower end of the broker views observed in our benchmarking analysis. The 2017 Q1 survey represents data from 36 participating banks during the period 15 to 31 January 2017. Source: Macquarie Capital s quarterly energy lender price survey: Q1 2017 Previous Brent Oil Pricing Base Case ($/bbl) Source: Macquarie Capital s quarterly energy lender price survey: Q4 2016 PwC 11
WTI benchmarking 3 PwC 12
$/bbl Broker and consultant WTI oil price forecasts (30 June 2017) Broker and consultant WTI oil price forecasts WTI Price Forecast - Nominal 100 We have collated 19 recent WTI oil price forecasts of a group of brokers and consultants. The graph on the right illustrates the low, median, high and inter-quartile views against the Thomson Reuters Eikon WTI Oil (NYMEX) forward curve as at 30 June 2017. The values shown are in nominal terms. Market participant forecasts are generally higher than the liquid period of the futures curve. 90 80 70 60 50 40 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 50% interquartile range Brokers Median Consensus Economics Eikon Forward curve Consultants median Source: Various broker forecasts, Capital IQ PwC 13
Broker and consultant WTI oil price forecasts (30 June 2017) Broker /Source Date Original broker unit 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Deutsche Bank 04/07/2017 US$/bbl 52 51 53 n/a n/a n/a n/a n/a n/a n/a Wells Fargo 30/06/2017 US$/bbl 55 58 62 n/a n/a n/a n/a n/a n/a n/a Barclays 03/07/2017 US$/bbl 48 53 n/a n/a n/a n/a n/a n/a n/a n/a UBS 06/07/2017 US$/bbl 53 57 62 67 67 69 70 71 73 74 HSBC 03/07/2017 US$/bbl 54 63 68 69 71 72 74 75 77 78 Credit Suisse 28/06/2017 US$/bbl 57 63 63 64 65 n/a n/a n/a n/a n/a Macquarie 02/07/2017 US$/bbl 52 46 49 n/a n/a n/a n/a n/a n/a n/a RBC 04/07/2017 US$/bbl 55 60 70 75 75 77 78 80 81 83 Morgan Stanley 26/06/2017 US$/bbl 52 57 60 60 n/a n/a n/a n/a n/a n/a BMO 26/06/2017 US$/bbl 49 50 50 55 60 n/a n/a n/a n/a n/a Jefferies 21/06/2017 US$/bbl 54 62 65 70 n/a n/a n/a n/a n/a n/a JP Morgan 26/06/2017 US$/bbl 53 53 58 64 77 76 78 80 81 83 Societe Generale 19/06/2017 US$/bbl 50 55 62 67 72 n/a n/a n/a n/a n/a ING 21/06/2017 US$/bbl 48 46 50 n/a n/a n/a n/a n/a n/a n/a GKI Research - Consensus Economics 19/06/2017 US$/bbl 54 58 61 63 67 68 69 70 72 73 Moody's Analytics - Consensus Economics 19/06/2017 US$/bbl 52 55 58 60 62 63 65 66 68 69 Sproule (Consultants) 30/04/2017 US$/bbl 53 55 65 70 73 74 76 77 79 81 McDaniel (Consultants) 01/07/2017 US$/bbl 50 56 60 64 70 75 79 80 82 84 GLJ (Consultants) 01/07/2017 US$/bbl 50 51 55 58 61 63 64 65 67 68 All - High US$/bbl 57 63 70 75 77 77 79 80 82 84 All - Low US$/bbl 48 46 49 55 60 63 64 65 67 68 All - average US$/bbl 52 55 59 65 68 71 72 74 75 77 All - median US$/bbl 52 55 60 64 69 72 74 75 77 78 Broker - Median US$/bbl 52 56 61 64 67 70 72 73 75 76 Consultants - Median US$/bbl 50 55 60 64 70 74 76 77 79 81 Consensus Economics 19/06/2017 US$/bbl 54 55 56 59 61 64 65 67 68 69 Eikon Forward curve 30/06/2017 US$/bbl 47 48 49 n/a n/a n/a n/a n/a n/a n/a Benchmarked Overall Median (December 2016) US$/bbl 55 62 67 71 71 74 76 77 79 80 Source: Consensus economics, various broker reports, Capital IQ PwC 14
WTI Oil Energy Lender Price Survey Energy reserve-based lenders forecasts Current WTI Oil Pricing Base Case ($/bbl) Macquarie Capital s quarterly Energy Lender Price Survey is a commodity pricing poll of energy reserve-based lenders. The most recent survey shows mean prices have marginally increased compared to the previous survey, with larger high prices representing a greater upside case. We note that the mean price is towards the lower end of the broker views observed in our benchmarking analysis, and below in the medium-term. The 2017 Q1 survey represents data from 36 participating banks during the period 15 to 31 January 2017. Source: Macquarie Capital s quarterly energy lender price survey: Q1 2017 Previous WTI Oil Pricing Base Case ($/bbl) Source: Macquarie Capital s quarterly energy lender price survey: Q4 2016 PwC 15
Henry Hub benchmarking 4 PwC 16
$/mmbtu Broker and consultant Henry Hub gas price forecasts (30 June 2017) Broker and third party Henry Hub gas price forecasts Henry Hub Price Forecast - Nominal 4.50 We have collated 17 recent Henry Hub gas price forecasts of a group of brokers and consultants. The graph on the right illustrates the low, median, high and inter-quartile views against the Thomson Reuters Eikon Henry Hub (NYMEX) forward curve as at 30 June 2017. The values shown are in nominal terms. Market participant forecasts are generally higher than the liquid period of the forward curve in the medium term (2018+). 4.00 3.50 3.00 2.50 2.00 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 50% interquartile range Brokers Median Consensus Economics Eikon Forward curve Consultants median Source: Various broker forecasts, Capital IQ PwC 17
Broker and consultant Henry Hub gas price forecasts (30 June 2017) Broker /Source Date Original broker unit 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 BMO Capital Market 06/07/2017 US$/MMBTU 3.09 2.98 2.85 2.82 2.85 2.91 2.97 3.03 3.09 3.16 Macquarie Research 06/07/2017 US$/MMBTU 3.01 3.48 2.85 2.85 3.09 n/a n/a n/a n/a n/a J P Morgan 04/07/2017 US$/MMBTU 3.00 2.89 2.65 2.75 3.22 3.21 3.27 3.34 3.41 3.48 HSBC 30/06/2017 US$/MMBTU 2.92 3.13 3.38 n/a n/a n/a n/a n/a n/a n/a RBC 06/07/2017 US$/MMBTU 3.04 3.13 3.13 3.13 n/a n/a n/a n/a n/a n/a Deutsche Bank 04/07/2017 US$/MMBTU 2.92 2.89 2.99 n/a n/a n/a n/a n/a n/a n/a Wells Fargo 30/06/2017 US$/MMBTU 2.99 2.92 2.96 3.06 3.16 3.29 n/a n/a n/a n/a TD Securities 30/06/2017 US$/MMBTU 3.15 3.00 3.00 3.25 3.32 3.39 3.46 3.53 3.60 3.67 Societe Generale 20/06/2017 US$/MMBTU 2.99 3.38 3.86 3.86 n/a n/a n/a n/a n/a n/a UBS 06/07/2017 US$/MMBTU 3.07 3.00 3.25 3.25 3.16 3.16 3.23 3.29 3.36 3.43 Credit Suisse 06/07/2017 US$/MMBTU 3.96 3.56 3.38 3.25 n/a n/a n/a n/a n/a n/a Barclays 04/07/2017 US$/MMBTU 3.00 3.00 3.00 3.06 3.13 3.19 3.26 3.32 3.39 3.46 Moody's Analytics - Consensus Economics 19/06/2017 US$/MMBTU 3.04 3.25 3.55 3.73 3.82 3.90 3.98 4.06 4.14 4.22 Morgan Stanley - Consensus Economics 19/06/2017 US$/MMBTU 3.30 3.04 2.92 2.87 2.90 3.22 3.28 3.35 3.42 3.49 Commonwealth Bank - Consensus Economics 19/06/2017 US$/MMBTU 2.78 2.86 2.94 3.04 3.18 3.51 3.58 3.66 3.73 3.81 McDaniel (Consultants) 01/07/2017 US$/MMBTU 3.08 3.05 3.20 3.30 3.65 3.85 4.10 4.15 4.25 4.35 GLJ (Consultants) 01/07/2017 US$/MMBTU 3.15 3.14 3.17 3.25 3.37 3.49 3.60 3.70 3.70 3.70 All - High US$/MMBTU 3.96 3.56 3.86 3.86 3.82 3.90 4.10 4.15 4.25 4.35 All - Low US$/MMBTU 2.78 2.86 2.65 2.75 2.85 2.91 2.97 3.03 3.09 3.16 All - average US$/MMBTU 3.09 3.10 3.12 3.16 3.24 3.37 3.47 3.54 3.61 3.68 All - median US$/MMBTU 3.09 3.10 3.12 3.16 3.24 3.37 3.47 3.54 3.61 3.68 Broker - Median US$/MMBTU 3.02 3.02 2.99 3.06 3.16 3.22 3.28 3.35 3.41 3.48 Consultants - Median US$/MMBTU 3.11 3.10 3.19 3.28 3.51 3.67 3.85 3.93 3.98 4.03 Consensus Economics 19/06/2017 US$/MMBTU 3.12 3.14 3.21 3.24 3.31 3.56 3.56 3.56 3.56 3.56 Eikon Forward curve 30/06/2017 US$/MMBTU 3.10 2.99 2.85 n/a n/a n/a n/a n/a n/a n/a Benchmarked Overall Median (December 2016) US$/MMBTU 3.21 3.30 3.40 3.56 3.49 3.29 3.58 3.65 3.73 3.80 Source: Consensus economics, various broker reports, Capital IQ PwC 18
Henry Hub Gas Energy Lender Price Survey Energy reserve-based lenders forecasts Current HH Pricing Base Case ($/MMBtu) Macquarie Capital s quarterly Energy Lender Price Survey is a commodity pricing poll of energy reserve-based lenders. The most recent survey shows a small increase in low and mean prices compared to the previous survey, with larger high prices representing a greater upside case. The 2017 Q1 survey represents data from 36 participating banks during the period 15 to 31 January 2017. Source: Macquarie Capital s quarterly energy lender price survey: Q1 2017 Previous HH Pricing Base Case ($/MMBtu) Source: Macquarie Capital s quarterly energy lender price survey: Q4 2016 PwC 19
NBP benchmarking 5 PwC 20
p/therm Broker and consultant NBP gas price forecasts (30 June 2017) Broker and consultant NBP gas price forecasts We have collated 16 recent NBP gas price forecasts of a group of brokers and consultants. The graph on the right illustrates the low, median, high and inter-quartile views against the Thomson Reuters Eikon NBP (ICE) forward curve as at 30 June 2017. The values shown are in nominal terms. Market participant forecasts are generally in line with the liquid period of the futures curve. NBP Price Forecast - Nominal 65 60 55 50 45 40 35 30 25 20 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 50% interquartile range Broker Median Eikon Forward curve Consultants Median Source: Various broker forecasts, Capital IQ PwC 21
Broker and consultant NBP gas price forecasts (30 June 2017) Broker /Source Date Original broker unit 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Credit Suisse 19/06/2017 p/therm 43 42 42 42 n/a n/a n/a n/a n/a n/a BMO 26/06/2017 p/therm 40 44 46 47 47 n/a n/a n/a n/a n/a Deutsche Bank 06/07/2017 p/therm 43 42 42 n/a n/a n/a n/a n/a n/a n/a Investec 03/07/2017 p/therm 45 45 45 45 45 45 46 47 48 49 Barclays 21/06/2017 p/therm 41 40 40 40 n/a n/a n/a n/a n/a n/a GKI Research - Consensus Economics 19/06/2017 p/therm 42 49 52 52 55 56 57 59 60 61 Lloyd's bank - Consensus Economics 19/06/2017 p/therm 43 43 n/a n/a n/a n/a n/a n/a n/a n/a ABN Amro - Consensus Economics 19/06/2017 p/therm 40 36 32 n/a n/a n/a n/a n/a n/a n/a Capital Economics - Consensus Economics 19/06/2017 p/therm 43 37 35 n/a n/a n/a n/a n/a n/a n/a ING Bank - Consensus Economics 19/06/2017 p/therm 35 36 40 45 n/a n/a n/a n/a n/a n/a Sproule (Consultant) 01/07/2017 p/therm 45 45 45 50 51 52 53 54 55 56 GLJ (Consultant) 01/07/2017 p/therm 43 46 49 52 54 55 56 57 58 60 All - High p/therm 45 49 52 52 55 56 57 59 60 61 All - Low p/therm 35 36 32 40 45 45 46 47 48 49 All - Average p/therm 42 42 43 47 50 52 53 54 55 57 All - Median p/therm 43 43 42 46 51 54 55 56 57 58 Broker - Median p/therm 42 42 42 45 46 45 46 47 48 49 Consultants - Median p/therm 44 46 47 51 53 54 55 56 57 58 Eikon Forward curve 30/06/2017 p/therm 40 42 43 n/a n/a n/a n/a n/a n/a n/a Benchmarked Overall Median (December 2016) p/therm 41 42 43 43 48 49 53 54 55 53 Source: Consensus economics, various broker reports, Capital IQ PwC 22
Jacqueline Chow Director Valuations Energy, Utilities, Mining & Infrastructure +44 7818 427 307 jacqueline.chow@pwc.com Mayank Sharma Senior Associate Valuations Energy, Utilities, Mining & Infrastructure +44 7718 979 416 mayank.b.sharma@pwc.com Chris Baller Associate Valuations Energy, Utilities, Mining & Infrastructure +44 7718 978 419 baller.chris@pwc.com This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. 2017 PricewaterhouseCoopers LLP. All rights reserved. In this document, "PwC" refers to the UK member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. 170119-104252-TW-UK